Lately, I have been spending some time thinking about the benefits of combining Perpetual Land Leases in the Bahamas with NFTs. As a result, I decided to write them down for you all today.
1. Simple setup — one contract but various rent payment methodologies
This is perhaps one of the biggest benefits to using both perpetual land leases and non-fungible tokens together. Under this model, there are no other contracts needed to manage your real estate other than the perpetual land lease itself! This means that only one contract needs to be updated/maintained if things change (e.g., different tenants). For example, let’s assume that initially your real estate being managed by a tokenized perpetual land lease uses SimpleRent. After some time, you notice that your property is generating higher rents. With one update to the contract you can switch to another rent payment methodology such as percentage of appreciation or even have tenants pay their rent in other cryptos.
2. Simplified management — no management fees involved
With this model, there are no third-party entities required for the typical real estate tasks associated with maintaining your assets (e.g., collecting rent, interest payments etc.). Following the first benefit above, all revenues collected by the perpetual land lease are distributed directly to token holders at a predetermined interval (e.g., daily). Therefore, token holders will only need to check their balance on a blockchain explorer and receive revenue distributions accordingly!
3. Transparency — token holders can see all real estate assets in your portfolio
This means that anyone with internet access can log onto a blockchain explorer and view all the assets currently in your portfolio (assuming you left this feature enabled). Also, when combined with something like mapping software , token holders will be able to visualize what properties are available to purchase by simply clicking on them! Furthermore, if an individual is using a perpetual land lease for their own personal use, they would even be able to look at how much income it generates per year or month etc.
4. Increases liquidity of assets
Tokenization allows for the investing process to become much more liquid than before (i.e., buying/selling/trading tokens). For example, if I want to sell my perpetual land lease tokens, I can easily list them on an exchange and receive fiat currency (e.g., USD) within days.
5. Time is money — Time saved by not using paper
Paperwork has always been a large part of the real estate industry (due to the amount of contracts involved). With this model you would no longer need to print out or store any leases etc. All transactions are recorded onto the blockchain which removes any third party reporting requirements!
6. No fraud potential due to transparency/immutability of blockchains
Since record keeping in the Bahamas is typically slow and confusing while also relying on archaic systems such as faxing, there is a lot of room for fraud. This model allows for parties to settle transactions in a fast and immutable manner (due to the immutability of blockchains) essentially removing disputes.
7. Reduced operational risk — decentralized and automated systems
Blockchain protocols such as Solana provide automated and decentralized transactional functionalities which can be beneficial when exchanging contracts or simply settling transactions! This means there is no room for fraud and everything will be recorded onto the blockchain. Also, we know that we can store land deeds etc. on decentralized storage networks such as IPFS . Therefore, even if our servers crash the entire world won’t come crashing down with it! Furthermore , because smart contract technology can update itself autonomously, should our perpetual land lease pricing model change, all agreements would still be valid without any need for additional signatures!
8. Using smart contracts to tokenize real estate assets is the way of the future
Using smart contract technology allows an individual or organization to create agreements that are automatically enforced without any third party interference (due to decentralized networks). This means it will be much harder for anyone who attempts to perform fraud on your asset. For example, if someone tries to sell their tokens in a lease agreement after they have already passed away, simply updating the contract price per token would nullify this action. Plus, due to the recent surge in cryptos combined with global access, anyone in the world can invest into your asset! Just think about being able to buy/sell/trade crypto tokens representing land anywhere in the world . It’s only a matter of time until this happens!
A project that is doing this today is Blue Terra on the Solana Blockchain. Check them out today and see how perpetual land leases are being leveraged with NFTs. We really are seeing a huge shift in the NFT space and the future of land ownership. We’re just getting started but Blue Terra has the potential to be the Zillow of the web 3 space. Check out their discord and let me know what you think in the comments.
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